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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Sonki who wrote (14507)	1/18/1999 4:58:00 PM
From: johnd	Read Replies (3) \| Respond to of 74651

Sonki, I don't think they will announce a split because currently microsoft considers the stock to be overvalued and splitting it will make it even more overvalued which hurts microsoft. Microsoft is long term value oriented, that means they want to (a) Buyback stocks at reasonable levels (b) Issue put warrants at good premium (c) Hire employees who see good future appreciation prospects for stock. Also, all past hisotry says that split happens when rolling EPS is about $3.00 (and NOT when investors drive up the stock to a particular price based on richer valuations). It is hard to answer valuation questions as it is based on market mood. The reasonable questions is downside risk. Sonki, you know that when times are not exuberant as it is today, msft touches 50 trailing PE many times during a year. At a 2.2 trailing EPS, at 50 PE, the downside risk is 110. That is what I worry about. It will hurt a lot of people's portfolios if they don't consider downside when the noise makers sign the follow the crowd choir. johnd